Kenya's Coffee Industry: From World-Famous Beans to the Fight for Fair Farmer Prices

Kenya's coffee, renowned for its bright acidity, complex flavour profile, and distinctive winey body, ranks among the most prized Arabica coffees in the world. Yet the industry that once defined Kenya's agricultural identity has endured decades of decline, from a peak production of 130,000 tonnes in the late 1980s to lows of under 40,000 tonnes in recent years. The 2025/26 season marks a potential turning point, with production forecast to rise 13.3 percent to 850,000 sixty-kilogram bags, driven by record-high global prices, sweeping government reforms, and renewed farmer enthusiasm. Understanding the dynamics of Kenya's coffee sector, from the famous SL28 and SL34 varieties to the Nairobi Coffee Exchange trading system, reveals both the challenges that have plagued the industry and the opportunities emerging from reform.

Production and Varieties

Kenya produces almost exclusively Arabica coffee, with the country's unique terroir, high-altitude growing conditions between 1,400 and 2,000 metres above sea level, volcanic soils, and equatorial climate producing beans of exceptional quality. The dominant varieties include SL28 and SL34, developed at the former Scott Agricultural Laboratories in the 1930s, which are renowned for their complex berry, citrus, and blackcurrant flavour notes that command premium prices on the global specialty coffee market.

Newer varieties including Ruiru 11 and Batian, developed by the Kenya Agricultural and Livestock Research Organisation (KALRO), offer resistance to Coffee Berry Disease (CBD) and Coffee Leaf Rust while maintaining reasonable cup quality. These disease-resistant varieties have gained popularity among smallholder farmers seeking to reduce input costs associated with fungicide application. The major coffee-growing regions include the central highlands of Nyeri, Kirinyaga, Murang'a, and Kiambu, the slopes of Mount Kenya in Embu and Meru, and the western highlands around Kisii and Bungoma.

The Nairobi Coffee Exchange

Kenya operates a unique auction-based marketing system through the Nairobi Coffee Exchange (NCE), where all Kenyan coffee is graded, catalogued, and sold in weekly auctions attended by licensed dealers and international buyers. The grading system classifies beans by size and quality: AA (the largest screen size at 7.2mm), AB (a mix of A and B screens), PB (peaberries), C, E (elephant beans), TT, and T grades. Kenya AA consistently fetches some of the highest prices of any origin coffee on the global market.

In February 2025, average coffee prices at the NCE rallied to a record high of USD 363 per 50-kilogram bag, up from USD 254 in October 2024, driven by tight global supply conditions and strong demand for specialty-grade Kenyan coffees. Premium lots from celebrated estates and cooperative societies in Nyeri and Kirinyaga regularly achieve prices several times the market average, reflecting the exceptional cup quality that Kenyan coffee is known for.

Coffee Sector Reforms

The government has embarked on comprehensive coffee sector reforms ahead of the 2025/26 season, with Parliament expected to finalise the enactment of the Coffee Act 2025 and the Cooperatives Act 2025. These laws aim to provide better governance of coffee factories and cooperative societies while permanently eliminating the cartels and middlemen that have historically extracted value at the expense of farmers.

Key reform measures include the reestablishment of the Coffee Board of Kenya and the Coffee Research Institute as standalone institutions, expected to reinvigorate research and market access. A streamlined licensing process eliminates the need for multiple licences by allowing each entity to hold a single licence as a miller, broker, or marketer. The Direct Sales Settlement (DSS) system requires that farmers receive their payment within five days of coffee sales, addressing the historical problem of delayed payments that could stretch to months or even years.

For the first time, farmers now have the right to withdraw their coffee from auction until prices are favourable, a significant shift from the previous system where middlemen could compel sales at depressed prices. Coffee cherry prices reached between KES 110 and KES 150 per kilogram in the recently ended season, a substantial improvement that has encouraged farmers to invest in their crop.

Smallholder Farmers and Cooperatives

Approximately 700,000 smallholder farmers produce around 60 percent of Kenya's coffee, organised into cooperative societies that operate wet processing mills (factories) across the growing regions. The cooperative system pools cherry from individual farmers, processes it through wet milling, fermentation, and drying, then delivers parchment coffee to dry mills for hulling and grading before sale at the NCE.

The cooperative model, while essential for aggregation and quality control, has been plagued by governance challenges including mismanagement, corruption, and lack of transparency in financial reporting. Reform efforts focus on strengthening cooperative governance through mandatory audits, elected management committees with term limits, and digital payment systems that ensure farmers receive their earnings promptly and transparently.

Export Markets and Global Position

Over 80 percent of Kenya's coffee production is exported, with the European Union as the primary destination, followed by the United States, United Kingdom, South Korea, and Japan. Coffee exports are forecast to grow by 10 percent to 840,000 bags in 2025/26. The United States has emerged as a particularly important market, with American specialty roasters increasingly seeking Kenyan single-origin coffees for their premium offerings.

Domestic coffee consumption, historically negligible in a predominantly tea-drinking nation, is growing as urban coffee culture expands. Consumption is projected to increase 6.9 percent to 62,000 bags in 2025/26, driven by the proliferation of specialty coffee shops in Nairobi, Mombasa, and other urban centres. Homegrown brands like Java House, Artcaffe, and independent specialty roasters are creating domestic demand that could eventually provide an important additional market channel for Kenyan farmers.

Challenges Facing the Industry

Despite positive reform momentum, Kenya's coffee industry faces persistent challenges. The conversion of coffee farms to real estate, particularly in Kiambu and other peri-urban areas of central Kenya, has permanently removed significant acreage from production. Climate change is altering rainfall patterns, increasing the incidence of pests and diseases, and shifting viable growing zones to higher altitudes. The ageing farmer demographic, with the average coffee farmer aged over 60, raises concerns about generational succession and the long-term viability of smallholder production.

Access to affordable finance for inputs including fertiliser, seedlings, and labour remains a barrier for smallholder producers. The implementation of reforms through the New Kenya Planters Cooperative Union (KPCU) has raised capacity concerns, as the organisation has not handled large quantities of coffee in years. Global coffee price volatility, while currently in Kenya's favour, creates uncertainty that makes long-term planning difficult for farmers dependent on a single cash crop.

Future Outlook

Kenya's coffee industry is at an inflection point. Record global prices, comprehensive regulatory reforms, improved farmer payment systems, and growing domestic consumption provide a foundation for revival. The government's target of increasing production to over one million bags within the next five years is ambitious but achievable if reforms are sustained, farmer incentives maintained, and investment in research, extension services, and climate adaptation intensified. Kenya's reputation for producing some of the world's finest coffees remains its strongest asset, and the premium that Kenyan beans command on global markets provides the economic rationale for reversing decades of decline.